Tuesday, October 13, 2009

MPs urge government to separate casino banks from retail banks

There has been a fresh call in Parliament to reform the UK banking system.The chair of the Christian Socialist Movement (CSM), Alun Michael MP and CSM member John McFall MP, chair of the House of Commons Treasury Committee, have tabled an Early Day Motion (EDM) urging the government to separate speculative casino banking from traditional retail banking.The EDM argues that strong regulation is essential but that this more radical measure is needed to protect UK retail depositors from future massive losses from casino banking.

Their action comes on the first anniversary of the Government’s rescue of UK banks, and as CSM, whose members include the Prime Minister, Gordon Brown, calls for action to ‘stop the banks gambling with our money’.CSM’s campaign urges the government to not only strengthen regulation but to implement a complete separation of speculative investment (‘casino’) banking from traditional retail banking in the forthcoming banking legislation the government is to put to Parliament.

Launching the campaign, CSM chair Alun Michael MP said:

“The current international banking crisis has done enormous damage to jobs and businesses in Britain, to the UK’s public finances and to hundreds of millions of the world’s poorest people.Our Government has taken the lead internationally in dealing with the crisis, but the consequences will still blight a generation and the hardest hit will be some of the poorest people in the world.That is why CSM is calling for action to ‘stop the banks gambling with our money’ and to ‘separate as well as regulate’ UK banks to help protect our people against this sort of banking crisis in the future. There must be no return to business as usual.It’s not just an economic issue but a moral one.We want a similar approach taken worldwide and for the UK to lead by example.”.

Outlining his decision to support the early day motion John McFall MP, Chair of the Treasury Select Committee said:

“I strongly welcome the government’s decision to introduce much stronger regulation in banking including new capital requirements.However, regulation will never be 100% successful in always preventing massive losses on speculative casino- type investment banking. So an ever present danger exists when banks combine this casino banking with traditional retail deposits which are rightly guaranteed by the taxpayer.Without a safeguard for the retail side, massive losses on the speculative casino side may once again threaten UK retail depositors.That would mean UK taxpayers would have yet again to pump in tens of billions of pounds to rescue such a combined bank. We cannot allow this to happen again.”

CSM’s campaign comes during a period of intense debate in the UK, Eurozone and US about the banking legislation needed to help prevent future banking crises.